The following graph shows the labor market in the fast-food industry in the fict

Question

The following graph shows the labor market in the fast-food industry in the fictional town of Supersize City. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Labor in the Fast Food Industry 20 18 16 14 12 10 Wage (Dollars per hour) Labor Demanded (Thousands of workers) Labor Supplied (Thousands of workers) Supply 500 Demand 0 50 100 150 200 250 300 350 400 450 500 LABOR (Thousands of workers)

Explanation / Answer

In this market equilibrium, hourly wage is $10 and the equilibrium quantity of labor is 250 thousand workers.

Suppose a senator introduce a bill to legislate a minimum hourly wage of $6. This type of price control is called a not binding price floor.

Labor demanded

(thousands of workers)

Labor supplied

(thousands of workers)

A minimum wage above $10 per hour is not a binding minimum wage in this market- FALSE

Wage($ per hour)

Labor demanded

(thousands of workers)

Labor supplied

(thousands of workers)

Pressure on wages 8 350 125 upward 12 125 375 Downward

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